MONEY GAME TIP OF THE DAY: Corporate Bonds Can Be Safer And Better Than Sovereigns

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Now that the U.S. has been downgraded by Standard and Poors, are U.S. AAA-rated companies better bets than than U.S. AA plus-rated Treasuries?There are 70 U.S. companies whose debt is cheaper than U.S. Treasuries Automatic Data Processing, ExxonMobil, Johnson & Johnson, and Microsoft. So it’s reasonable to think that they deserve more of your attention.

FT’s Gillian Tett seems to think so, and he gives two simple, specific reasons:

  • Companies are no subject to whims of political fervor– which is not always rational per se.
  • Mobility. These companies can move operations ands funds overseas whenever they like.

Part of what this boils down to is that investors need to think of who understands their balance sheets, is more transparent, and is more rational — AAA-rated American companies, or its AA-rated government?